The Financial Coach™ - Managing people & their emotions around money » provisional tax

30th September…

Gregg — Tue, 21 Sep 2010 15:53:46 +0000

Just a reminder that next week Thursday is yet another provisional tax deadline…anyone needing to make a 3rd provisional tax payment must do it before then.

SARS are no longer sending out forms or reminders so the onus is now fully on tax-payers. It also appears that the form is no longer a requirement and the easiest way to do the 3rd payment is on efiling under the “additonal payments” link…you can even get SARS to take the funds from your bank account if you want.

Provisional tax returns – to submit or not to submit?

Gregg — Thu, 05 Aug 2010 06:11:40 +0000

There seems to be quite a bit of confusion around provisional tax this year and more importantly who is liable to submit a return. SARS have adopted a new approach and are not automatically sending out returns any more and are rather leaving it up to tax payers to request the forms from SARS.

In spite of this we have still received almost 70 emails notifying tax payers that they are liable to submit a provisional tax return – and the letters are confusing too becuase they make reference to the fact that according to SARS, the tax payer is a provisional tax payer and thus liable to submit a return. Although, it also says “You do not need to submit an IRP6 return if you are no longer liable for Provisional Tax. However, you may be charged interest and/or a penalty for non-submission of your IRP6 return if at the time of assessment it is determined that you were liable as a provisional taxpayer”. Little wonder that there is such confusion!

So what do the rules say – just who is a provisional tax payer?

With reference to the definition of a provisional taxpayer in Paragraph 1 of the Fourth Schedule of the Income Tax Act No.58 of 1962, a provisional taxpayer is:
• Any person (other than a company) who derives income, other than remuneration or an allowance or advance as contemplated in section 8(1).
• Any company excluding public benefit organisations and recreational clubs.
• Any person who is notified by the Commissioner that he is a provisional taxpayer (this is an important clause).

The rules then go on to say the following:

The following persons / natural persons are not required to pay provisional tax:

Individuals below the age of 65 who do not carry on a business and whose taxable income:

will not exceed the tax threshold for the tax year; or
from interest, dividends and rental will be R20 000 or less for the tax year.

Individuals age 65 and older if their annual taxable income:

consists exclusively of remuneration, interest, dividends or rent from the lease of fixed property; and
is R120 000 or less for the tax year.

So that’s what the rules say…but then there is that sneaky clause that says that “any person who is notified by the Commissioner that he is a provisional taxpayer” is liable to submit a return. So does the letter mentioned above constitute “being notified” or not?

So my advice is that if you think you might be liable, or you were in the past but now could be exempt in terms of the above rules, then phone the call centre 0860 121218 and ask SARS. Just make sure that you get the name of the call centre agent, the time and date of the call and most importantly, make sure you get a reference/case number for the call. And if you are still not sure, then err on the safe side and submit a nil return (it is a really simple and relatively quick process).

If you need to submit a return, you have 26 days to go…

SARS – just like Alice

Gregg — Fri, 26 Feb 2010 11:36:42 +0000

I had to make a trip to SARS in Cape Town this am to hand in the 6 paper provisional tax returns that I cant get on efiling – this is despite several email and telephonic requests to SARS to get them on e-filing.

As I arrived there I was greeted by the site in the picture below…

this is a many-hour queue (and it has been like this since November last year according to the SARS lady that helped me). Fortunately, I did not have to stand in line as I just needed to hand in docs and get stamped copies.

The whole exercise has got me thinking about SARS and e-filing and just how much like Alice SARS is…

For those of you who dont remember Alice (it is not a reference to the song) but rather to the little girl with the bump in the middle of her forehead. When she was good she was very good but when she was bad she was horrid!

And so it is with SARS and e-filing – when it is good it is excellent, but when it goes wrong it is awful! It is hard to argue or reason with a computer and even more so with a disinterested clerk at the other side of the call-centre telephone line.

Despite this though, e-filing is on the whole still brilliant – if you are not registered to e-file your annual and provisional tax returns then you are welcome to join the queue. Guess I will see you in August when I make my next trip to SARS to submit the few paper returns that I still cant get on e-filing – but at least I wont be waiting in any queues.